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plan administrator, allowed Mr. Mall to join the plan, and they
made him eligible to receive a death benefit in an amount
commensurate with the death benefit payable under other life
insurance that he had owned outside the plan. Dr. Mall falsified
and backdated documents in an attempt to legitimize Mr. Mall’s
participation in the Neonatology Plan and to attempt to
legitimize the plan with various governmental agencies and
regulatory bodies.
The Neonatology Plan’s adoption agreement provides that all
employees covered by the plan will receive a death benefit equal
to 6.5 times his or her prior-year “compensation” (defined by the
plan to exclude nontaxable fringe benefit items). Neonatology
paid Dr. Mall compensation of $240,000, $250,000, and $168,000
during 1991, 1992, and 1993, respectively. Neonatology did not
pay Mr. Mall any compensation during those years.
Neonatology contributed to the Neonatology Plan during each
year from 1991 through 1993 and, for each subject year, claimed a
deduction for those contributions and other related amounts. In
1991, Neonatology contributed $10,000 to the plan on behalf of
Dr. Mall. It also paid the plan’s trustee and its administrator
$1,000 each. In 1992, Neonatology contributed $10,000 to the
plan on behalf of Dr. Mall and $10,000 on behalf of Mr. Mall. It
deducted the $20,000 on its 1992 Federal corporate income tax
return as an employee benefit program expense, and it deducted on
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